European Commission revising EU securitisation regulatory framework

The European Commission (DG FISMA) launched a targeted consultation in Q4 of 2024 to assess the effectiveness of the EU securitisation framework, which was introduced in 2019 with the aim to promote an EU securitisation market that finances the economy without creating risks to financial stability. In the Commission’s view Securitisation can play a crucial role in the development of the capital markets union and the savings and investment union. They also state that by freeing up balance sheets, banks and non-bank lenders can increase lending to households and corporates, while also providing another asset for investors to invest in. This statements by the Commission on the securitisation technique are very important politicly to support changes that will remove remaining regulatory barriers to the use of securitisations in Europe. 

Relaunching securitisation has been recommended in the report from Christian Noyer, the report from Enrico Letta and the report from Mario Draghi as a means of strengthening the lending capacity of European banks, creating deeper capital markets, building the European savings and investments union and increasing the EU’s competitiveness. In addition, the Eurogroup statement of March 2024 and the European Council conclusions in April 2024 on the capital markets union highlighted the need to relaunch the European securitisation market.   

The European Commission seeks to gather the views and collect evidence from relevant stakeholders who have practical with the current EU securitisation framework and its subsequent amendments, as well as its possible amendments evolution in the forthcoming review of the framework. This consultation covers a broad range of issues, including: 

The effectiveness of the securitisation framework, the scope of application of the Securitisation Regulation, due diligence requirements, transparency requirements and definition of public securitisation, supervision, the Single, Transparent and Standardised (STS) label, the securitisation platform, the prudential and liquidity treatment of securitisation for banks, the prudential treatment of securitisation for insurers, and the prudential framework for IORPs and other pension funds. 

Policy-makers and supervisors are currently more favourable to securitisation than before, so this Commission initiative is an excellent opportunity to improve the regulatory framework in a pollical context that is more positive than previous years. While securitisations issued by consumer credit and leasing companies are attracting investors reasonably well compare to other asset classes, any improvement to the securitisation framework in Europe will be  welcomed to boost this financing technique which is instrumental for the financing of our industries in the capital markets. For this reason, Leaseurope has proposed a number of legislative changes in its response to the Commission aiming at removing remaining regulatory barriers to the use of securitisations in Europe. 

The European Commission is now analysing stakeholders’ responses and a legislative proposal amending the EU securitisation framework is expected to be published in the first semester of 2025.